Auto Loan Interest Deduction Proposed Regulations

Best wishes for a safe, fun and healthy new year.

The IRS is actually open today. 

They just issued proposed regulations on the auto loan interest deduction and covered what is considered personal use (a new 50% personal rule)

 Proposed Regulation §1.163-16(f)(1) would provide that a taxpayer is considered to purchase that APV for personal use if, at the time the indebtedness is incurred, the taxpayer expects that the APV will be used for personal use by the taxpayer that incurred the indebtedness, or by certain members of that taxpayer’s family and household, for more than 50 percent of the time.

Schedule 1-A of the tax return actually has 2 columns to report interest. (the first column shows interest allocated to Sch C, E or F that is not eligible for the deduction). The second column shows the personal portion of the interest.

For the final assembly rule, the Proposed Regulations show:

  the taxpayer may rely on (1) the vehicle’s plant of manufacture as reported in the VIN under 49 CFR 565; or (2) the final assembly point reported on the label affixed to the vehicle as described in 49 CFR 583.5(a)(3). Taxpayers can determine whether the vehicle’s plant of manufacture is located in the United States by following the instructions on the National Highway Traffic Safety Administration (NHTSA) VIN Decoder website: https://www.nhtsa.gov/vin-decoder.